An In-Depth Analysis of the Reshuffle at Apple

On October 30th, as Hurricane Sandy was hounding the East Coast of the United States, Apple announced one of the biggest corporate reshuffles in their history, which some dubbed as the company’s biggest shake-up since Steve Jobs resigned from Apple in August 2011, shortly before his death from cancer in October. Soon after the announcement, however, it transpired that this was no ordinary reshuffle and the reasons for it were a lot more deep-rooted than we ever actually thought.

As an economist, this announcement caught my eye, not only because it’s Apple but really because I wanted to know exactly what actually happened and also how this restructuring will affect the company as a whole. Read on for my in-depth analysis.

What actually happened?

In short, there’s been a reshuffling of some of the top positions at Apple. Scott Forstall, who currently holds the title of Senior Vice President for iOS software, will leave the company from 2013 and John Browett, head of Apple’s successful venture into retail stores, will also leave at an unspecified date. Apple has promoted Craig Federighi, who joined Apple in 2009 after moving from Ariba, an e-commerce network (Federighi had previously worked at NeXT alongside Jobs) to the head of iOS software engineering, and Jonathan Ive, previous senior vice president of industrial design and the designer behind some of Apple’s most recognisable products, including the iPhone, iPod, iMac and iPad, will also assume responsibility for all of the company’s user interfaces.

Scott Forstall will leave Apple sometime in 2013.

Why has it occurred?

Apple has always been famed for its secrecy, so we’ll probably never find out why both Forstall and Browett, who hold (held) senior positions in the company, were ousted however we can certainly speculate on a few possible reasons.

When Steve Jobs ran Apple, Forstall was one of his closest allies and the two collaborated very closely on the overall concept, design and execution of iOS. According to an analyst, Forstall’s desire for more power at the company had always been apparent, however it may have been the iOS 6 Maps fiasco that was ultimately the final nail in the coffin for Forstall. Shortly after it was released, customers were complaining about mislabelled and inaccurate maps, sometimes showing local businesses that had been shut for years or towns in completely different locations, and Apple were caught for a second time round with egg on their face (the first was the Antennagate fiasco along with the release of the iPhone 4).

Forstall did not apologise publicly along with Tim Cook on the iOS 6 Maps issue.

Cook apologised publicly in an open letter on Apple’s website (you can still read it here) and even recommended third-party competition to customers until Apple sorted the issue out. What was apparent in the letter, however, was in my opinion the distinct lack of Forstall’s name – it was simply signed Tim Cook, Apple’s CEO. It is extremely interesting to note that that Forstall’s group had actually gone ahead with the service, despite claims from some outside developers that the service was riddled with flaws and bugs.

The second victim of this corporate reshuffle is John Browett, the former Senior Vice President of Retail. Browett, a Brit who had been poached by Apple from Dixons (a large British electronics retailer), was ousted after initiating unwelcome changes to staffing policies at Apple Retail stores worldwide (mostly related to pay and layoffs – the precise story is still unknown) and his admittance in August that “we messed up”. The dismissal of Browett may cause some within the company to question Cook’s leadership skills, as it was the CEO himself who personally hired Browett for the position. In one e-mail sent, Cook described him as the “best by far” and stated, “his role isn’t to bring Dixons to Apple, [it’s] to bring Apple to an even higher level of customer service and satisfaction.”

Where’s this going to leave Apple?

Corporate reshuffles are one thing, but when you are getting rid of some of the top figures in the company then it certainly does raise eyebrows. Even the investors didn’t take too kindly to it: Apple’s stock price opened on Wednesday (the NYSE was closed on Monday and Tuesday due to Hurricane Sandy) opened at $10 less than the previous day at 593.00. But probably the most pressing question is how does something like this affect the company as a whole?

Well, I would say for the better. The most important appointment for me is that Jonathan Ive is now head of all the company’s user interfaces, meaning that Ive will now be foraying into both the software side of the company, ultimately giving him the final say in the overall customer experience of Apple products which to this day is one of the things that sets it apart from the competition. We may see some of Ive’s design philosophies emigrating over to iOS (and what a welcome change that will be!) and into OS X. Forstall’s duties have been dividied up between Craig Federighi, who will take on iOS and the head of internet software and services Eddy Cue taking on Maps and Siri.

Gene Munsterm an analyst for Piper Jaffray wrote in the Financial Times:

The real story is that they’re [Federighi, Cue] trying to consolidate around Jony Ive.

An Apple with Jony Ive having the final say about both hardware and, ultimately, software, as well as the merging of some of the company’s main sections, such as Mac and iOS software, under one leader is the kind of Apple that Steve Jobs envisioned but never really saw to completion. Anyone who had read Walter Isaacson’s truly outstanding biography on the late Apple CEO will know that ever since Steve Jobs found Apple and designed its very first computer, he has been pushing for the extremely tight integration between hardware and software. That’s why both OS X and iOS will only (legitimately, anyway) run on Apple devices and why these devices that are maybe 4 years old still run the latest software.

Of course, it will take some time for these changes to filter through to all levels of the company. However I am confident that with this more efficient structure and sharp focus on more detailed tasks at hand, we as Apple customers are going to see some pretty big changes in the next couple of years – and I’m sure that these changes will be worth the wait.